Many visitors to our site have a vague notion of valuation but would like to know more about how the 'value' of a company differs from book value. We are commonly asked about this difference from clients who are going to sell their firm. In November 2007 MBVG presented a PowerPoint presentation at the Annual Summit for Olsen Thielen Technologies, Inc., a subsidiary of Olsen Thielen & Co., Ltd., which also owns MBVG. In it we talk about intangible assets and help identify them. This is a useful exercise for owners, directors, employees, and other stakeholders to learn more about their firms and what constitutes value.
We are making this available as a primer so that our clients can develop a sense of value offered by intangible assets which are not normally capitalized in financial statements. It is available as two downloads: a PowerPoint presentation and a presentation paper. We suggest that you download both and print the paper (you will require Adobe Acrobat Reader - see below) before viewing the PowerPoint, which references the paper.
Contact us if you are having problems viewing the paper or the PowerPoint.
During February/March 2009, MBVG President Randall Schostag was interviewed for two major national groups: The Financial Executives Institute (FEI) and the Chartered Financial Analyst's (CFA) Institute. Following the meltdown in the financial industry in late 2008, the whole treatment of Fair Value came under intense scutiny. Here are the articles in which Schostag was quoted:
In the March/April 2008 issue of the Value Examiner, published by the National Association of Certified Valuation Analysts (NACVA), Minnesota Business Valuation Group's Randall Schostag published the first of a two-part series pertaining to the valuation issues which confront portfolio managers. Changes in accounting requirements by the Financial Accounting Standards Board with the introduction of SFAS 157, coupled with pressure from the Securities Exchange Commission have put a heavy burden on fund managers for reporting to investors. Since the market meltdown in late 2008, the Financial Accounting Standards Board, Congress, the SEC, and many others have suddenly become aware of what Schostag wrote about long before the meltdown. The first article discusses the background of why Fair Value was written the way it was and the likely consequences. His second article in the May/June 2008 issue actually offered some possible solutions before the problem became widely known. It addresses possibly automating the process as a solution.
Minnesota Business Valuation Group publishes an electronic newsletter, which we complete approximately monthly. To become a subscriber, send an email to Randy Schostag.
In the newsletter we often cite court opinions or discuss accounting or business changes. Because our range of services is wide, we also discuss things which are operational or planning in nature for your assistance. Often we have more complete copies of court opinions, accounting pronouncements, and other materials available to our clients.
Our latest newsletter and other recent copies are provided below. If you have any questions or want to be on our mailing list, call us at 612.240.0309 or toll free at 800.303.2889. There is a wealth of information available for you in these newsletters.
Check them out for free. Our newsletters are not "glossy", but we try to concentrate on important recent developments which you can use. You can review them by using Adobe Acrobat Reader. If you do not have that installed, click on the appropriate link below.
Below are recent copies of our Business Valuation Notes, a monthly email newsletter for our clients.
The estimation of how easy or difficult it is to buy or sell an investment is one of the most difficult issues appraisers face. Just because a publicly traded common stock is owned and is quoted at a published price does not mean that an entire block of that holding can all be sold at the quoted price. In most instances, if the block is large, the seller will have to accept a discount for the shares. In recent years the commonly accepted methods of ascertaining the amount of discount have been attacked in the courts during litigation. MBVG Principal Dr. Ashok Abbott has spent the past six years researching this factor and has produced what we call the Abbott Index. It is a method which uses real world trading in published common stocks to ascertain the amount of discount which would be required to be taken to sell a common stock. He has also applied this method to ascertain the amount of discount which must be taken for a privately held common stock by examining public companies with similar attributes and then applying the findings to the private firm. In addition, he distinguishes between a marketability discount, which differentiates between a publicly registered and traded security and a liquidity discount, which applies to the sale of all common stock, public or private. We provide our readers with two downloads to become acquainted with the Abbott Index:
The American Society of Appraisers will publish a more recent review of Ashok's work in the next issue of its Business Valuation Review. After it is published, MBVG will provide the substance of that review on this page as a download.
MBVG has become a national leader in providing valuation services for hedge funds and similar multiple security portfolios. Using conventional appraisal, these appraisals would be cost prohibitive, yet such independent evaluations are becoming increasingly important. MBVG believes that it is the only source at this time of a system which both provides a robust evaluation of those portfolios but has also considered the importance of the body of law which courts have established to review appraisals. At the heart of the system is a platform called LCRT. MBVG is pleased to offer a joint presentation by the Minnesota Business Valuation Group and LifeCycle Returns, Inc. This presentation was made to the National Association of Valuation Analysts at a national conference and published by "Valuation Strategies", a Warren Gorham & Lamont (of RIA) and has attracted the attention of the FMA and the CFA. Entitled "The Discounted Cash Flow Model, Using New Modeling to Test Reasonableness", the presentation describes the use of other tools to verify outputs using the discounted cash flow model. However, the paper sets forth a substantial discussion of the LCRT platform which we've described in the Portfolio Equities section for use with Fund Compliance Valuation and a security selection tool for portfolio managers to improve performance. This paper sets forth a useful - although partial - explanation of what is incorporated in this new model.
The foregoing publications are all FREE to you. Please visit our Online Store for other publications we have available for purchase, both proprietary to the Minnesota Business Valuation Group, as well as products offered by others with whom we work.
